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China agrees to expand access to its markets: U.S. official

China agreed to let foreigners own bigger stakes in its securities firms at a high-level dialogue with the United States, an American official said Friday, after talks went ahead despite a standoff over a Chinese legal activist.

By Joe McDonaldThe Associated Press

Fri., May 4, 2012

BEIJING, CHINA — China agreed to let foreigners own bigger stakes in its securities firms at a high-level dialogue with the United States, an American official said Friday, after talks went ahead despite a standoff over a Chinese legal activist.

Beijing also agreed to expand access to its auto insurance market and to negotiate guidelines to regulate export credits, said the official, who briefed reporters on condition of anonymity. China’s billions of dollars in loans and other support to exporters have been criticized as anticompetitive subsidies, prompting pressure to impose limits.

This week’s Strategic and Economic Dialogue came as a weak global economy and pressure to generate jobs is fuelling U.S. demands for Beijing to lower market barriers and scrap currency controls. Washington complains China’s currency is undervalued, giving its exporters an unfair advantage and hurting foreign competitors and the global economy.

The dialogue was overshadowed by the tussle over legal activist Chen Guangcheng but went ahead as scheduled. He has made a high-profile plea for U.S. sanctuary after escaping house arrest. The annual talks are meant to head off trade disputes between the world’s two biggest economies and promote co-operation in environmental and other issues.

Chinese officials agreed to raise the cap on foreign ownership of securities joint-ventures to 49 per cent, according to the U.S. official. That is above China’s promise of 20 per cent ownership as part of its World Trade Organization membership.

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Washington sees that as a “very welcome change in policy,” the official said.

No deadline was set but Chinese regulators are expected to start work immediately on regulatory changes, the official said.

The governments also agreed to start negotiations this summer on a “set of disciplines” for export credits, the official said.

Chinese officials also announced plans to open the country’s third-party auto insurance market to foreign firms, the official said.

Earlier Friday, U.S. Treasury Secretary Timothy Geithner said in a meeting with President Hu Jintao that China’s plans to move toward a more market-oriented exchange rate are “very promising.” Last month, Geithner complained that an undervalued yuan was a source of “unfair competition.”

Chinese envoys made a “clear, sustained commitment” to more exchange-rate reform at this week’s talks, the U.S. official said, but gave no details.

Chinese officials have said, however, that future gains in the yuan are likely to be limited. Trade Minister Chen Deming said Thursday that China’s shrinking global trade surplus suggests the yuan is at an appropriate level.

Participants in this week’s wide-ranging dialogue included U.S. Federal Reserve chairman Ben Bernanke, his Chinese counterpart Zhou Xiaochuan and trade, energy and finance officials from both sides.

U.S. officials are starting to see “real progress” in Chinese reforms aimed at making state companies more market-oriented and reducing support for them such as privileged access to bank loans, the official said.

Beijing is in the midst of a multi-year effort to boost domestic consumption and reduce reliance on exports and investment but change has been slow.

Still, foreign governments and business groups complain Beijing is hampering market access and trying to shield Chinese companies in promising industries such as renewable energy despite its market-opening pledges.

The United States reported its trade deficit with China reached an all-time high of $295.5 billion last year, up 8.2 per cent from 2010s previous record.

The U.S. Commerce Department announced last month it would impose new import fees on Chinese-made solar panels after concluding manufacturers received improper subsidies. Chinese authorities announced their own probe in November into whether U.S. support for renewable energy companies hurts foreign suppliers.

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